Year-End Tax Planning Tips to Reduce Next Year’s Taxes

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Tax planning should start before December 31 — because actions taken in the final months of the year can significantly lower your tax bill.

Step-by-Step Year-End Tax Moves

  1. Prepay Deductible Expenses
    • If you’re self-employed, consider paying January’s rent, utilities, or insurance in December. This increases your deductions for the current year.

  2. Delay or Accelerate Income
    • If your income is unusually high this year, consider delaying invoicing until January. If you expect higher income next year, accelerate billing so it counts for this year’s lower rate.

  3. Maximize Retirement Contributions
    • Before year-end, increase 401(k) contributions through your employer or make IRA deposits.

  4. Harvest Tax Losses
    • If you have investments that lost value, consider selling them before year-end to offset capital gains.

  5. Make Charitable Contributions
    • Donate before December 31 to claim the deduction this year. Consider donating appreciated assets for additional tax benefits.

  6. Review Withholding & Estimated Payments
    • Check if you’ve paid enough taxes for the year. If you’re short, make a catch-up payment to avoid underpayment penalties.

Action Plan

  • Step 1: Write all deadlines in your calendar now.

  • Step 2: Two weeks before each due date, confirm you have all needed documents.

  • Step 3: If you can’t file in time, file for an extension — but remember, this extends filing, not payment. You must still pay what you owe by the original due date to avoid penalties.

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